This is an Assignment where you have to analyze an Annual Report, do Essay - 1

This is an Assignment where you have to analyze an Annual Report, do some calculations and write a report about your findings (Accounting) - Essay Example e financial year of 2004, the company presents an acceptable profitability performance, acceptable solvability ratios, good efficiency performance and a rather unpreferable liquidity performance. We believe that management is able to maintain stability of the business. Shareholder should give good evaluation points to the management and their performance, but nevertheless, should also be aware of the nature of the industry which present the possibility of only providing the corporation with no more than 3% profit (out of sales). There are several important emphasizes relating to the significance of financial reporting. We already know that the main purpose of providing sound and viable financial report is to satisfy current shareholders and investors, and attract future ones. But what are the significant points that drive shareholders and investors to finalize their financial investment decisions? According to Financial Management (2005), investors seldom read trough business plans or financial statements thoroughly. They already know what they want. According to the article, most investors want to see business that will grow rapidly and someday will provide a handsome profit. Investors generally does not invest on products, instead, they invest on business. Thus, long term investors generally want to see good profitability ratios and prospects, more than other indicators within financial reports. Joseph Stiglitz (2002), on the other hand, stated that only 10% of today’s new capitals has been raised via equity markets. This condition rises because shareholders do not generally have enough access to corporations to ensure themselves that their investments are safe and growing. For major shareholders (present and future ones), the most influential factor in terms of investment is risk. Future shareholders are generally reluctant to finance businesses that present considerably significant or uncertain risks. They have also been wanting to have more ‘control’